Jay Fleitman: A case of fiscal cliff diving
NORTHAMPTON — The best analogy I can make to the recent Washington melodrama known as the “fiscal cliff negotiations” is that of rearranging deck chairs on the Titanic. With $16 trillion in current debt, which does not include the $4 trillion that the government “owes” the Social Security trust fund, and with adding over $1 trillion in new debt yearly under Obama, this recent angst was over whether to increase taxes on the richest 2 percent or 1 percent.
Would Washington confiscate enough extra tax dollars to pay for eight days or four days of government, while national bankruptcy looms?
But each side had an ax to grind. Democrats and President Obama had a political promise to fulfill, one of dividing classes and of making a gesture to reduce income disparity. Republicans identified the problem as unsustainable government spending, not inadequate tax revenue, and said the way to avoid national insolvency is to encourage economic growth that would be dampened by higher taxes. At least the Republicans were talking about reducing government spending. Democrats won’t.
I will admit that I was almost hoping they wouldn’t pass this bill and that the Bush tax cuts would expire. Even though this would have raised my taxes, the country did just vote for big government in November’s election, and the honest thing would be to pay for it.
Obama kept boasting that we had great prosperity with the higher Clinton-era tax rates for the wealthy, so why not the same for everybody?
The fiscal cliff bill did not spare you if your income is less than $400,000. For those who earn more than $250,000, there is a 3.8 percent tax rise on investment income to pay toward Obamacare. All Americans get a 2 percent increase in payroll taxes, and several exemptions are gone.
There is a hidden taxation on the middle class: As business owners shoulder the increased burden of higher taxes and the cost of mandated health care coverage of Obamacare, to cover these costs there will be reduced salaries for workers, as well as less hiring and layoffs. The costs of goods and services may rise.
Though the individual mandate in Obamacare is what caught the attention of the Supreme Court and the public, this is not what makes this program a mammoth financial albatross. Obamacare requires that health insurance bought by every American must cover virtually every medical service, hence the battle over obligatory contraception coverage. This “Cadillac coverage” makes medical insurance very expensive, and that insurance has to be bought by the employer, or, if not available through work, paid for by each individual (or you will be fined). If the individual is considered not to have the means for this level of premium, then the cost will be paid by taxpayer subsidy.
As a nation, we can’t seem to acknowledge that we have spent and borrowed ourselves to near bankruptcy, and that unless we soon reduce this spending, we will leave our children in a deep hole. As a people, we bear responsibility as we keep electing politicians who promise us that lunch is always free.
The yearly pricetag of our federal government is roughly as follows: Health and Human Services (Medicare and Medicaid), $800 billion; Social Security, $900 billion; Department of Defense, $700 billion; the rest of the federal structure, $800 billion.
As a columnist, I can propose oddball suggestions for reducing government spending, knowing that I have absolutely no impact.
So here goes.
I would delay eligibility by one year for Medicare and Social Security benefits, and I don’t mean just for Americans under the age of 50. That was a promise the politicians had to make to avoid the wrath of voting seniors in Florida. I am now 61, and despite the AARP’s fuming, it is my generation that has allowed our politicians to borrow and spend like drunken sailors and mortgage our children’s future. We must help fix this while we still have time. Our parents, after all, put their lives on the line in World War II and Korea, so we can work just one year longer.
I would drop the salaries of all federal workers by 15 percent, which still has them paid more than comparable workers in the private sector.
I would eliminate the federal deduction for state and local taxes. Why should the residents of a low-tax state be required to subsidize the federal income tax bills for poorly run states with high tax rates like California, New York and Illinois?
I would rewrite Obamacare’s requirements for mandatory insurance coverage downward so that catastrophic medical costs are covered, and no one goes bankrupt with a serious illness.
Yes, I would look also to the military for cuts, but I would be very careful to make sure our equipment is the best and our personnel are well protected.
No, I would not raise taxes on businesses, as we have the second-highest tax rates in the world, and we want these businesses here, not over there.
We need adults in the government, but the American public doesn’t vote that way.
Jay Fleitman, M.D., lives in Northampton. His column appears the first Tuesday of the month. He can be reached at